The recent changing of the guard at
BHP Billiton
and
Rio Tinto
is a clear sign that priorities have shifted as a result of falling commodities prices, but it is not expected to lead to a change in long-running strategies of investing in top-tier assets.

New Rio chief executive
Sam Walsh
has made clear acquisitions are off the agenda, and incoming BHP chief executive
Andrew Mackenzie
has also downplayed their importance given the miner wants to lower its debt levels.

The focus is on stripping out costs added to the business in boom times, raising productivity through increased automation, squeezing more out of existing infrastructure, and selling non-core assets.

Both miners have also increased their emphasis on capital discipline, which could ultimately increase returns to shareholders. Rio is considering returns to shareholders as a direct alternative to new growth projects, setting a much higher hurdle for new investments to proceed.

In the past, Rio’s policy was to approve every project it could afford that met its criteria for returns before looking to return excess cash through dividends and share buy-backs.

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Rio unveiled $US14.4 billion of write-downs at its full-year results, primarily due to poor acquisitions in aluminium and coal, while BHP announced $US3 billion of write-downs, half of it related to the costly, ill-timed Worsley alumina project in Western Australia.

To help maintain their balance sheets and targeted single-A credit ratings at a time when commodity prices are lower, BHP and Rio are considering selling a host of non-core assets.

Rio is looking to sell its diamonds division and its Pacific Aluminium unit, but it has made it clear that it is taking a close look at any asset that is not core or is under-performing. However, Mr Walsh emphasised he would not sell assets below their value – this was not a case of “fire sales" or “knee jerk reactions".

BHP is also running a sales process for about a dozen non-core assets, including its Gregory Crinum coking coal complex in Queensland, a Tasmanian manganese smelter and iron ore projects in West Africa. It agreed to sell assets worth $US4.3 billion in the first half of the financial year, including its stake in the Browse liquefied natural gas project in WA and the Ekati diamond mine in Canada.

On the cost-cutting front, Rio wants to remove $US2 billion of costs from the business this year and $US3 billion next year, and on an ongoing basis, relative to its 2012 cash operating cost base of $US35 billion. Chief financial officer
Guy Elliott
told analysts that on average, the miner’s cost base had risen by $US2 billion a year since 2009. Rio will be reporting progress against the target at its half-year and full-year results.

BHP has declined to give a specific cost-cutting target, but said it had stripped an annualised $US1.9 billion of costs from its business in the first half, although half of that was exploration and project evaluation costs excluded from Rio’s target figures.

To boost productivity, both miners are focused on squeezing more tonnes from their existing infrastructure, particularly in their iron ore operations in WA. That, in turn, will lower costs.

Mr Walsh said he hoped to roll out more remote operating centres, like the one Rio uses in Perth for iron ore, across its other divisions.

Mr Mackenzie, a former chief technology officer at BP, is expected to focus on using technology as part of his overall focus on cost control and capital discipline. “What I will do . . . is really provide an even sharper focus in how we execute against that strategy, and extend our pressure on costs and our commitment to real capital discipline to drive us – or keep us, in many cases, at the bottom of costs per mined tonne, and at the upper ranges of capital productivity," he told investors.

Further management changes are expected at both mining companies. Rio has not yet appointed a new CFO to replace Mr Elliott, who plans to step down by the end of the year. Mr Walsh has indicated that like Mr Elliott, the new CFO may also serve as Rio’s head of strategy.

There is market speculation that Rio will appoint an external candidate.

At BHP, Mr Mackenzie will need to appoint a new head of the non-ferrous division to take over when he steps up to the top job on May 10.

It is possible there will be some losers in the succession race, including ferrous and coal head
Marcus Randolph
and corporate development head
Alberto Calderon
. Petroleum boss
Mike Yeager
could decide the time is right to move on, leading to a further management shuffle.

Executives who could be in line for promotion as a result of the changes include iron ore head Jimmy Wilson, metallurgical coal head
Hubie van Dalsen
and base metals head Peter Beaven, all of whom are familiar to local investors.